NextEra Energy (NEE) owns Florida Power & Light Co, which is America's largest electric utility that sells more power than any other utility. You may remember my bearish review of the SPDR Utility Sector ETF (XLU) on August 30, so you should not be too surprised at these bearish charts of NEE.
In this daily bar chart of NEE, below, I can see that prices have been on a downward path the past year. NEE trades below the declining 50-day moving average line and below the negatively sloped 200-day moving average line. The trading volume has been more active since late January and tells me that traders have been voting with their feet and selling.
The On-Balance-Volume (OBV) line has been mostly weak the past year and tells me that sellers of NEE have been more aggressive than buyers. The Moving Average Convergence Divergence (MACD) oscillator is in a bearish alignment below the zero line.
In this weekly Japanese candlestick chart of NEE, below, I can see the last four years of price history. Prices have been bouncing off the $70 area for a long time forming a serious neckline as part of a major top pattern (a rounded top). NEE trades below the bearish 40-week moving average line.
The weekly OBV line is in a bear trend. The MACD oscillator is in a bearish alignment below the zero line.
In this daily Point and Figure chart of NEE, below, I can see a potential downside price target in the $56 area.
In this second Point and Figure chart of NEE, below, I used weekly price data with a five box reversal filter. It is easy to see the size of NEE's major top on this chart. The software is suggesting the $43 area as an eventual price target.
Bottom line strategy: It looks like NEE has further to go on the downside, and traders and investors should avoid the long side of NEE in the months ahead.
Get an email alert each time I write an article for Real Money. Click the "+Follow" next to my byline to this article.
